Mark Leigh, COO at Xtrade, looks on GCC Efforts to Modernize Retailing and Insurance

Tuesday 14 March 2017

Dubai - MENA Herald: GCC retail sales are not yet at global dimensions, with only three locally based retailers counted among the world’s top 250, according to Deloitte's Global Powers of Retailing 2017 report. The UAE's Emke Group which runs the Lulu chain on hypermarkets was ranked 153rd ,with sales revenue of $6.2, followed by Dubai mall operator Majid Al Futtaim (160th, $6 billion) and Saudi-based food firm Savola (240th , $3.6 billion). Another aspect of this backwardation is that with some 94% of GCC money transfer industry in the region classified as “bricks and mortar”, the fintech revolution has much room to empower existing channels with new technology-based services.

A related area in which challenges are leading to market reform is in insurance, where low oil prices and increased exposure to volatile investment assets are driving GCC credit risk coverage for local insurers. Particularly because of the slowdown in insurance premium growth (14% in 2015 y/y compared with 17% in 2013 y/y, regulator are moving toward risk-based capital requirements and actuarial-led reserving, insurers’ credit quality will likely improve.

The Saudi Arabian Monetary Agency (SAMA) has regularly introduced new initiatives over the past decade, including actuarial pricing. The effect has been impressive as gross premiums written across the sector only grew by 0.5% in 2016, but net income improved by 139%. The Saudi insurance sector’s net income for 2016 rose 139.2% to SR2.5 billion (2015: SR1.0 billion).

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